World Economy Supervisor: Professor Hyun Hoon Lee.

(Fall Semester 2017)

INDIA

By: Chanchal Sharma

Contents:

Introduction.

Economy GDP .

International Trade- exports and imports.

India and Korea.

International Organizations- WTO, ASEAN, World Bank.

Sustainable Development- Inclusive Growth & Green Growth.

Introduction

https://www.youtube.com/watch?v=jqwBHyzMzME

• States: 29, Union Territories-7

• Languages: 22

• The seventh largest country in the world, with the enormous Himalayas at one side and the ‘3 oceans meet’ at Kanyakumari on the other side

• One of the top ranking cuisines of the world with rich spices.

• Vast geography that would satisfy tourists of diversity – snow stretched Himalayas, exotic beaches of Goa, tremendous temples of Tamil Nadu, natural beauty Kerala and so on.

• World’s Seventh-Largest Economy ( World Economic Forum)

• Home to 1.34 billion people – 18% of the world’s population.

(Will overtaken China as the world’s most populous country by 2024.)

• World’s Largest Youth Population,

(But, over 30% of India's youth are NEETs (not in employment, education or training), according to the OECD.

Economy

and

Foreign Trade

India GDP Growth

• The Indian economy has recorded a

strong growth in the recent past.

• Growth has been led by consumption,

while investment growth has been

weak

• Progress on important economic and

structural reforms over the past year

has been impressive.

Key Reforms

• Make In India

• Digital India.

• Aadhar – 1.1 billion unique identification numbers

• Demonetization

• Goods and Service Tax.

• the Beti Bachao Beti Padhao (Celebrate Girl Child, Enable her

Education)

Year 2016 -2017 Year 2010-2011

Source: Export Import Data bank Department of commerce http://commerce.nic.in/eidb/icomq.asp

Business Environment

India And Korea

• Bilateral trade reaching $15.78 billion in 2016.

• India is the one of largest trade partner of Korea.

• The bilateral Comprehensive Economic Cooperation Agreement (CEPA) set in place since 2010 has spurred

the process.

• Investments both ways are on the upswing.

• Korean Investment: Hyundai Motors, Samsung Electronics, LG, etc => invested around $ 4.43 billion till

March 2017 in India => plans to expand further. Recently KIA Motors do Green field investment in India.

• Indian FDI led by Mahindra & Mahindra (Ssangyong Motors), Aditya Birla Group (Novelis Ltd.) & TATA

(Tata Daewoo commercial vehicles) also invest close to $ 3 billion.

@

KITA

India and World Trade Organization (WTO)

Background: India has been a WTO member since 1 January 1995 and a member of GATT since 8 July 1948.

India Ratified Trade Facilitation Agreement

Issues India

Agriculture

Intellectual Property

Services: liberal commitments on the part of its trading partners for cross-border supply of services, including the movement of ‘natural persons’ (human beings) to developed countries

Background: ASEAN-India dialogue relations have grown rapidly from a sectoral

dialogue partnership in 1992 to a full dialogue partnership in December 1995.

ASEAN-India Summit has been held annually.

India’s initiative “Act East Policy” and “Make in India” complement to realize the

vision and goals outlined in the ASEAN 2025: Forging Ahead Together.

India and ASEAN

The ASEAN-India Trade in Goods Agreement (AITIGA) entered into force on 1

January 2010. The signing of the AITIGA on 13 August 2009 in Bangkok paves the

way for the creation of one of the world’s largest free trade areas (FTA) with almost

1.8 billion people and a combined GDP of US$4.5 trillion.

During the 10th ASEAN-India Summit in November 2012, the ASEAN-India

Leaders tasked their economic ministers to step up their efforts and flexibility to

conclude the ASEAN-India Trade in Services and Investment Agreements at the

earliest. Upon being signed by all Parties in 2014, the Agreements entered into force

on 1 July 2015.

ASEAN-India Commemorative Summit on 25th January, 2018

Exploratory work on the extension of India-Myanmar-Thailand Trilateral Highway

to Cambodia, Laos and Vietnam.

Setting up of a regional high-capacity fibre-optic network, supplemented by a national

rural broadband network and digital villages in remote areas.

Enhance cooperation in Humanitarian Assistance and Disaster Relief Exercises, as

well as in capacity building for disaster management personnel.

World Bank

The World Bank Group’s (WBG) Country Partnership Strategy (CPS) for India for

2013-2017 focuses on helping India accelerate poverty reduction and boost shared

prosperity, and is closely aligned the Government’s 12th Five-Year Plan, and its goal

of “faster, sustainable, and more inclusive growth.”

The WBG aims to contribute to India’s development by deepening and

strengthening engagement in three priority areas: integration, rural-urban

transformation and inclusion.

“Integration” seeks to increase market integration by focusing on addressing infrastructure gaps and investment climate as key measures needed to help low-income states converge more quickly with their faster-growing neighbors.

With 600 million people expected to live in India’s cities by 2031, “rural-urban transformation” will require intensified engagement to improve the management and livability of medium-sized cities.

“Inclusion” will entail a stronger focus on human development with improvements in healthcare systems and nutrition, on the quality of education at all levels, as well as on better access to finance and social protection for the underprivileged. A common theme across these three areas of engagement will be an emphasis on improved governance, sustainability, and gender equality.

Sustainable Development

-Green Growth

-Inclusive Growth

Data: WHO. Graphic by Nick DeSantis, Forbes Staff.

New Delhi's Smog

Since November, air quality readings have reached unprecedented levels in and around Delhi

with one monitor showing a figure of 969.

Reasons:

• dust storms generated by construction projects.

• stubble burning (farmers in the north set fire to fields to clear them for the next season).

• the government’s leniency about use of pet coke (a fuel that emits up to 10% more CO2

than coal when burned)

• Diwali – Fire crackers.

Measures:

to reduce pollution such as closing all schools,

placing a ban on construction activity

increase in parking charges to reduce exhaust emissions from private cars.

Energy Reforms – Green Growth

• Recent fuel price reforms.

to address rising mortality from exposure to urban air pollution,

source of revenue,

headway on its ‘nationally determined contribution’ (NDC) for the 2015, Paris Agreement. To reduce greenhouse gas

intensity of Indian GDP 33-35 percent by 2030 relative to 2005 levels

• Fiscal instruments are the most efficient policies for reducing the environmental costs of fuel use.

if tax levels are set efficiently they can balance environmental benefits and economic costs,

productive use of the revenues, offsets costs to the economy from higher energy prices.

• Progressively raising the coal tax is an effective way to reduce CO2 emissions.

Inclusive Growth

India is ranked 131 of 189 countries listed in the United Nations Development Programme’s latest Human

Development Report 2016

Economic Inequality:

Rising inequality will lead to slower poverty reduction, undermine the sustainability of economic growth,

compound the inequalities between men and women, and drive inequalities in health, education and life chances.

According to a report by the Johannesburg-based company New World Wealth, India is the second-most unequal

country globally, with millionaires controlling 54% of its wealth. With a total individual wealth of $5,600 billion,

it’s among the 10 richest countries in the world – and yet the average Indian is relatively poor.

.

•

• In Case of India, Solutions-

Agriculture

Education

Gender Inequality

Agriculture- Over 58 per cent of the rural households depend on agriculture

as their principal means of livelihood.

As per the estimates by the Central Statistics Office (CSO), the share of

agriculture and allied sectors (including agriculture, livestock, forestry and fishery)

is estimated to be 17.3 per cent of the Gross Value Added (GVA) during 2016-17

at 2011-12 prices.

(we see, a huge % of population engage in agriculture – still not productive- if it

is developed- then labor and sector both will be productive)

Policies by Government

Investment in logistics, marketing infrastructure, and roads can help create efficient supply chains linking the

farmer to the consumer across states

National Agriculture Market (e-NAM) in April 2016, which aims to integrate 585 wholesale markets across

India.6 This is expected to improve competitiveness in marketing through larger participation of buyers and

yield a more transparent system of bidding.

To reduce weather-dependent production risks, providing affordable and wide coverage of insurance and

provision of irrigation will help make supply more responsive to increase in prices.

Education - According to Census 2011 Literacy Rate to be 64.8 %, the male literacy rate is 75.3% and

that for females is 53.7%.

Comparing India’s experience to Korea’s policies of “growth with equity” suggests that education could be one

of the major contributor of Inclusive Growth. From the 1960s to early 1980s, Korea grew rapidly. A

prominent Factor : the simultaneous, rapid expansion of educational levels and employment

opportunities. Following , twenty years - Korea outperform India on educational attainment.

Reason :

India has kept up with regard to attainment of secondary and tertiary education, the share of primary

schooling fall behind.

India spent on average around 30 percent on primary education between 1999 and 2012 and the remainder

on secondary and tertiary education

Policies suggested:

Increase spending on primary education

Improve in school quality - increase the productivity of students and hence motivate

students/ parents to invest in education.

Gender Inequality - The 2016 World Economic Forum's Gender Gap Index ranked India

136th out of 144 countries on economic participation and opportunity, indicating large gender gaps in

labor force participation (LFP). According to Cuberes and Teignier (2016), closing the gender gap in India

could boost GDP by 27 percent.

Reasons:

Gender gaps in entrepreneurship and access to formal finance remain high- limited awareness and social

restrictions

However, unless accompanied by reforms to lower labor market rigidities, increased access does not

generate sufficient formal sector job creation.

due to stringent labor market regulations, new firms hire workers informally, thus leading to an increase

in informality in the labor market.

Policies suggested:

An increase in - formal finance leads to a greater number of entrepreneurs operating in

the formal sector - higher share of formal sector output.

Effective and more targeted implementation of skill training programs for women to

enhance their employability across various industries.

Easing labor market regulations to promote the creation of formal sector jobs—is

needed to help raise female entrepreneurship.

Others

• India is making a conscious effort to translate its growing economic clout

into 'soft power' on the world stage – for example by promoting:

• Indian Council for Cultural Relations (ICCR) that have been increasing

awareness about India, and also providing scholarships to students from

a number of countries.

• International Yoga Day

(Ayurveda, Yoga)

• International outreach of Indian

Drama and Cinema is growing.

• Miss World 2017

References:

• 2017 ARTICLE IV CONSULTATION—PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR

INDIA, IMF Country Report No. 17/54

• INDIA SELECTED ISSUES, IMF Country Report No. 17/55

• Government of India, Ministry of Commerce, Achievement during Last 2 years,

http://commerce.gov.in/writereaddata/uploadedfile/MOC_636010120081797735_Achievement_Last_2Yr.pdf

• 8 things you need to know about India’s economy, Andrew wright, © 2017 World Economic Forum, October 2017

https://www.weforum.org/agenda/2017/03/worlds-biggest-economies-in-2017/

• https://www.weforum.org/agenda/2017/03/worlds-biggest-economies-in-2017/

• India and WTO – Detailed Analysis of All Related Issues and Concepts, JANUARY 20, 2016

http://www.insightsonindia.com/2016/01/20/india-and-wto-detailed-analysis-of-all-related-issues-and-concepts/

• OVERVIEW ASEAN-INDIA DIALOGUE RELATIONS, July 2017

http://asean.org/storage/2012/05/Overview-ASEAN-India-as-of-July-2017-r2-cl.pdf

• ASEAN – India Relations

http://www.mea.gov.in/Portal/ForeignRelation/ASEAN_India_August_2017.pdf

• https://www.ibef.org/industry/agriculture-india.aspx

Questions

Thank You